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PERFORMANCE EVALUATION OF THE
UNITED SPIRIT LTD
SUBMITTED BY
VISHNUSHANKAR V.S
DEPT.COMMUNICATIVE ENGLISH
UPRN:222105128
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What is Investment?
Investment is the act of committing financial resources to assets or ventures with
the intention of generating future returns or profits. The core principle of
investment revolves around allocating capital into various types of assets, such as
stocks, bonds, real estate, or businesses, with the expectation that these
investments will appreciate in value or produce income over time. The primary
objectives of investing include capital growth, income generation, and financial
security.
When individuals or institutions invest, they typically aim to achieve a return on
their investment (ROI), which can come in the form of capital appreciation—
where the value of the asset increases over time—or income generation—such as
dividends from stocks, interest from bonds, or rental income from real estate.
Investments are often chosen based on an assessment of risk tolerance, investment
horizon, and financial goals. Risk tolerance refers to the investor's ability and
willingness to endure fluctuations in the value of their investments, while the
investment horizon is the timeframe over which the investor aims to achieve their
financial objectives.
Different investment strategies cater to various goals and risk appetites. For
instance, value investing involves selecting undervalued assets with the
expectation that their true worth will be recognized over time, whereas growth
investing focuses on assets expected to experience above-average growth. Income
investing targets assets that provide regular returns, such as bonds or dividend-
paying stocks, while diversification—spreading investments across different asset
classes—aims to reduce risk by mitigating the impact of any single investment's
poor performance.
The investment process requires thorough research and analysis to evaluate the
potential risks and rewards associated with different opportunities. Investors must
stay informed about market trends, economic conditions, and the performance of
their investments to make well-informed decisions. Regular monitoring and
periodic adjustments to the investment portfolio are crucial to aligning with
changing market dynamics and personal financial goals.
In summary, investment is a fundamental aspect of financial planning, aimed at
growing capital, generating income, and achieving specific financial objectives. It
involves careful selection of assets, strategic planning, and ongoing management
to navigate risks and optimize returns. Through effective investment practices,
individuals and institutions can work towards achieving long-term financial
stability and growth.
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Different kinds of investments
1. Stocks: Shares of ownership in a company. Investors can benefit from price
appreciation and dividends, but they also face the risk of losing money if the
company performs poorly.
2. Bonds: Debt securities issued by governments or corporations. Investors lend
money to the issuer in exchange for periodic interest payments and the return of
the principal amount at maturity. Generally considered lower risk than stocks.
3. Mutual Funds: Investment funds that pool money from many investors to
purchase a diversified portfolio of stocks, bonds, or other securities. Managed by
professional fund managers.
4. Exchange-Traded Funds (ETFs): Similar to mutual funds, but traded on stock
exchanges like individual stocks. They often track an index and offer
diversification with lower fees.
5. Real Estate: Investing in property such as residential, commercial, or industrial
real estate. Returns can come from rental income and property value appreciation.
6. Commodities: Physical goods like gold, oil, or agricultural products. Investors
can buy commodities directly or through futures contracts. Prices can be volatile.
7. Cryptocurrencies: Digital or virtual currencies that use cryptography for
security. Examples include Bitcoin and Ethereum. They are highly volatile and
speculative.
8. Savings Accounts: Bank accounts that earn interest on deposited funds. They
offer low risk but typically lower returns compared to other investment options.
9. Certificates of Deposit (CDs): Time deposits offered by banks with fixed
interest rates and maturities. They are low risk but usually offer lower returns
compared to other investments.
10. Peer-to-Peer Lending: Platforms that connect borrowers with individual
lenders. Investors earn interest on loans they provide, but there is a risk of
borrower default.
11. Hedge Funds: Investment funds that use a range of strategies to earn returns
for their investors, including leveraging and short selling. They often require high
minimum investments and charge significant fees.
12. Private Equity: Investments in private companies (not publicly traded)
through direct ownership or through private equity funds. These investments can
be illiquid but have potential for high returns.
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13. Venture Capital: A type of private equity focused on investing in startups and
early-stage companies with high growth potential. It carries high risk but can offer
significant rewards.
14. Collectibles: Items like art, antiques, or rare coins. These investments can
appreciate in value but are highly subjective and can be illiquid.
15. Annuities: Insurance products that provide regular payments in exchange for
an initial investment. They can offer guaranteed income but often come with high
fees and complex terms.
What do you mean by shares?
Shares, also known as stocks or equities, are units of ownership in a company.
When you buy shares, you are purchasing a portion of the company, which
entitles you to a claim on its assets and earnings. Shares can be traded on stock
exchanges, and their value can fluctuate based on company performance and
market conditions. Investors may earn money through dividends (periodic profit
distributions) and capital gains (selling shares at a higher price than they were
purchased). We can invest in these shares and these investments can be of several
types, they are:
Investment in shares can take various forms:
1. Individual Stocks: Directly purchasing shares of specific companies. This
approach allows for targeted investments but requires careful research and
monitoring of each company’s performance.
2. Mutual Funds: Pooled investment funds that buy shares in a diversified
portfolio of companies. Managed by professional fund managers, mutual funds
offer diversification and professional management but may come with higher
fees.
3. Exchange-Traded Funds (ETFs): Investment funds that trade on stock
exchanges like individual stocks. ETFs typically track specific indices or sectors,
providing diversification with generally lower fees than mutual funds.
4. Index Funds: A type of mutual fund or ETF designed to replicate the
performance of a specific market index, such as the S&P 500. They offer broad
market exposure and low fees.
5. Dividend Stocks: Shares of companies that regularly pay dividends to
shareholders. This type of investment focuses on income generation through
dividend payments in addition to potential capital gains.
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6. Growth Stocks: Shares in companies expected to grow at an above-average rate
compared to other companies. These stocks might not pay dividends but offer
potential for significant capital appreciation.
7. Value Stocks: Shares of companies that are considered undervalued based on
fundamental analysis, often with lower price-to-earnings ratios. They may offer
potential for price appreciation and dividends.
8. Blue-Chip Stocks: Shares of large, established, and financially stable
companies with a history of reliable performance and dividend payments. They
are generally considered lower risk compared to smaller companies.
9. Penny Stocks: Shares of small, often unproven companies traded at low prices.
These can offer high returns but come with high risk and volatility.
10. Sector-Specific Funds: Mutual funds or ETFs that focus on specific sectors of
the economy, such as technology or healthcare, allowing investors to target
particular industries.
11. Socially Responsible or ESG Funds: Investment funds that focus on
companies meeting environmental, social, and governance (ESG) criteria. These
funds appeal to investors interested in sustainable and ethical investing.
Returns and Different kinds of Returns
Returns refer to the financial gains or losses realized from an investment over a
specific period. They measure how effectively an investment has performed and
are crucial for evaluating and comparing investments. Returns can be expressed in
both absolute terms (e.g., dollars) and percentages Different kinds of returns
provide various perspectives on how well an investment is performing.
Here’s a breakdown of the key types of returns:
1. Absolute Return - The total monetary gain or loss from an investment over a
specific period.
2. Capital Gains - Profits earned from selling an asset at a higher price than its
purchase price.
3. Dividends - Payments made to shareholders from a company’s earnings. These
are typically paid quarterly or annually.
4. Interest Income - Earnings from fixed-income investments, such as bonds or
savings accounts, where interest is paid periodically.
5. Total Return - The overall return on an investment, which includes both capital
gains and any income received (dividends or interest). It provides a
comprehensive view of an investment’s performance.
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6. Annualized Return - The average annual return over a specified period,
adjusted for compounding. It helps compare investments with different durations.
For example, if an investment grew by 20% over two years, the annualized return
would reflect the compounded annual growth rate.
7. Real Return - The return adjusted for inflation, which reflects the actual
increase in purchasing power. For instance, if an investment returns 8% but
inflation is 3%, the real return is approximately 5%.
8. Nominal Return - The return on an investment before adjusting for inflation. It
is the raw return percentage you see without considering the effect of inflation on
purchasing power.
9. Risk-Adjusted Return - The return on an investment considering the level of
risk taken. Common metrics include the Sharpe ratio, which measures returns per
unit of risk, and the Sortino ratio, which measures returns relative to downside
risk
UNITED SPIRIT LTD
United Spirits Limited, abbreviated to USL, is an Indian alcoholic beverages
company, and the world's second-largest spirits company by volume.[4] It is a subsidiary
of Diageo, and headquartered at UB Tower in Bangalore, Karnataka. USL exports its
products to over 37 countries.
HISTORY
UNITED SPIRITED LTD Company formed in 2002. In the same year, the company acquired
Phipson Distillery, McDowell International Brands Ltd, and most of Triumph Distilleries &
Vinters Pvt Ltd. McDowell launched Derby Special Whisky in 2003 and Old Cask rum in
2004.On 21 March 2005, McDowell & Company entered into an agreement with Jumbo
World Holdings Limited (JWHL) in Dubai to acquire Shaw Wallace.[9][10] The board of
Shaw Wallace approved the merger of the company with USL and fixed the appointed date
of the merger as 1 April 2008 subject to approvals.[11] In 2006, McDowell & Co Limited,
Herbertsons Limited, Triumph Distillers and Vintners Private Limited, Baramati Grape
Industries India Limited, Shaw Wallace Distilleries Limited and four other companies are
merged to form United Spirits Limited. Bouvet Ladubay, a subsidiary of France-based
Taittinger was acquired the same year. The UB Group purchased Whyte & Mackay in May
2007 for £595 million. USL also acquired Liquidity Inc., makers of Pinky Vodka, in 2007.
USL launched Black Dog 18 YO and Four Seasons Barrique Reserve in 2009–10, and
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McDowell's No 1 Platinum, 100% grain-based whisky, in 2011 .On 27 May 2013, Diageo
acquired a 10% stake in United Spirits at a cost of ₹20,927,196,000 (US$250 million). It
also separately acquired an additional 58,668 shares for ₹ 85,778,082.[13] On 4 July 2013,
Diageo bought an additional 14.98% of the company for ₹31.35 billion (US$380 million).
Diageo acquired an additional 21.77 million shares at a cost of ₹1,440 (US$17) per share in
an off-market deal from United Spirits' promoters, raising its holdings to 25.02 percent of
the company.Following that purchase, Diageo held 36.3 million shares in USL, acquired at
a cost of ₹52,358.5 million (US$630 million),[16] making it the largest shareholder.Under
pressure from Diageo, some substantial changes to the management structure of the firm
began to take place in 2013.In 2014, Diageo's shareholdings rose to 54.8% of USL.In early
2014, Whyte & Mackay, which had been purchased by UB Group in 2007, was sold to
Philippines-based Emperador for £430 million.On 5 November 2017, the Paradise Papers,
a set of confidential electronic documents relating to offshore investment, revealed that
United Spirits with three other subsidiaries based in the UK were allegedly involved with
diverting funds amounting to $1.5 billion.
Company Profile
United Spirits Limited (USL) is a major alcoholic beverages company in India and a
subsidiary of Diageo, a global leader in alcoholic beverages. Headquartered in Bangalore,
Karnataka, USL operates one of the largest portfolios of alcoholic drinks in India, including
whiskies, vodkas, and brandies.
• Founded:1999 (as a result of the merger between Shaw Wallace & Company and
the United Breweries Group)
• CEO: Anand Kripalu (as of the last update)
• Industry: Alcoholic Beverages
• Headquarters: Bangalore, India
Products and Services
United Spirits Limited offers a diverse range of alcoholic beverages, including:
• Whiskies: McDowell's No.1, Royal Challenge, Black Dog
• Vodkas:McDowell's No.1 Celebration Vodka
• Brandies: McDowell's No.1 Brandy
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Market Capitalisation
Approximately INR 48,000 Crores (This figure fluctuates with market conditions. Please
verify with current financial data sources.)
Dividend History
The dividend history of United Spirits Limited has been relatively consistent. The company
has been known to distribute dividends to its shareholders annually. For specific figures
and trends, refer to the latest annual reports or financial statements.
Sales and Profit of Last Five Years
Here's an overview of the sales and profit figures for United Spirits Limited over the past
five years:
| Financial Year | Revenue (INR Crores) | Net Profit (INR Crores) |
|-------------|-----------------------|-------------------------|
| 2019-20 | 9,016 | 1,476 |
| 2020-21 | 7,772 | 1,032 |
| 2021-22 | 8,760 | 1,238 |
| 2022-23 | 9,500 | 1,470 |
| 2023-24 | 10,000 (estimate) | 1,600 (estimate) |
SHAREHOLDING PATTERN
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MARKET PRICE CHART
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OVERALL MARKET ANALYSIS OF THE COMPANY
Overall Performance Analysis
The strength of the company are
• Strong Market Position:Leading brand presence in the Indian alcoholic beverage
market.
• Diverse Portfolio:Extensive range of products catering to different segments.
• Strategic Ownership: Backed by Diageo, which provides financial stability and
global expertise.
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The weakness of the company is mentioned below
• Regulatory Challenges: Alcoholic beverage industry is highly regulated, which may
impact operations.
• Dependence on Indian Market:Heavy reliance on the Indian market can be a risk if
market conditions change.
The opportunities USL could provide are
• Market Expansion: Potential to expand further into rural and semi-urban areas.
• Product Innovation: Opportunity to innovate and introduce new products to meet
changing consumer preferences.
The major threats company facing right now are
• Economic Downturns: Economic conditions can impact consumer spending on
non-essential goods like alcoholic beverages.
• Competition: Intense competition from both domestic and international brands.
